(Reuters) – After a spectacular year, precious metals are expected to make additional gains in 2021, with silver outperforming, but analysts are becoming more cautious about gold prospects as the global economy recovers from the impact of the coronavirus.
The pandemic generated stocks of investors who sought to protect their wealth. This, together with supply deficits, has raised gold and palladium prices by more than 20% this year, while silver has risen 47% and platinum 10%.
“We will see new bullish records for gold and palladium (in 2021),” said Philip Newman, of Metals Focus.
“But silver will have the most massive gains,” he said.
(GRAPHIC – Precious metals price performance in 2020 🙂
Traditionally seen as a safe place to store money, gold started to rise as economic growth slowed in 2019, but the pandemic accelerated the rally and in August prices reached a record high of $ 2,072.50.
While demand for physical gold was hammered as the virus forced closings, demand for investment increased as reflected in the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, which recorded its biggest annual gain since 2009 at around 30%.
(GRAPHIC – Participation in the SPDR Gold Trust versus gold prices 🙂
Prices fell to around $ 1,900 when investors stopped buying and vaccines were implanted against the virus, encouraging investment in assets that perform well during periods of economic growth.
Huge government debt, negative real bond returns and threats of inflation and market turmoil, all supporting gold, will persist in 2021, said Ross Norman, an independent analyst. Gold could rise another 20% next year, he said.
(GRAPHIC – Real US earnings versus gold 🙂
A safe-haven asset like gold, but also an industrial metal used in products like solar panels, silver rose from $ 18 an ounce in January to nearly $ 30 in August, before dropping to around $ 25.
Analysts say its dual role and increased volatility mean it can do better than gold with the acceleration of economic growth and the impetus of US President-elect Joe Biden for clean energy.
(GRAPHIC – Gold / Silver Ratio 🙂
Investors have absorbed a surplus of platinum, which is also used in jewelry, industry and automakers to reduce pollution.
But they are unlikely to do so again, especially as supplies, which fell because of the new coronavirus, have recovered, said StoneX analyst Rhona O’Connell.
This will likely drag prices, which at around $ 1,000 an ounce are only slightly higher than at the beginning of the year.
The auto industry uses four-fifths of palladium, which, like platinum, neutralizes engine emissions. It is little used for investment.
Years of supply shortages pushed prices to a record high of $ 2,875.50 an ounce in February. “The market thought it could run out of metal,” said a trader.
Most analysts expect the deficit to continue in 2021, as the global economy recovers and car sales rebound.
(GRAPHIC – Performance of precious metals in 2020 🙂
Reporting by Peter Hobson in London, Swati Verma and Sumita Layek in Bengaluru; edition by Barbara Lewis